1. Field of the Invention
This invention relates generally to transaction closings and more particularly to an electronic closing platform for real estate closings.
2. Description of the Related Art
Borrowers often use lenders to finance real estate transactions in the primary mortgage market. A mortgage loan closing may involve a property sale, or a refinancing of an owned property. Where there is a property sale, a typical closing can involve a buyer, seller, lender. The lender loans funds to the buyer, and disburses them to the seller to complete the transaction. The buyer signs a promissory note (also referred to as a mortgage note) that obligates the buyer to repay the loaned funds. The buyer is thus often referred to as the borrower in the mortgage loan closing transaction. The closing will typically be performed by a closing agent.
One problem with existing closings is that there can be errors in the closing documents. Another problem is that each party (e.g., lender, closing agent) may have their own computer system for entering and managing data that corresponds to documents used at the closing. There are often discrepancies between the data belonging to the various parties, or discrepancies between a party's data and the closing documents, which need to be corrected or otherwise remedied after a closing takes place.
In addition to the involvement of a lender and closing agent, other parties may also be involved, including but not limited to those performing an appraisal, providing title insurance, providing flood insurance, providing mortgage insurance, and underwriting the loan. These parties also contribute information that is relevant to the closing and may even be used in the closing documents. This furthers the opportunity for errors and discrepancies between and among parties' data, as well as the closing documents.
Other parties may further complicate matters. Lenders sell mortgages to investors in what is known as the secondary mortgage market. Examples of investors include government sponsored entities (GSEs) such as Fannie Mae, Freddie Mac, and Ginnie Mae. Investors also include commercial banks, community banks, savings and loan associations, and others. Some of these entities participate as both lenders and investors at various times. That is, they both sell and purchase portfolios of mortgages. In any event, these investors may make investments in mortgages conditional on particular requirements. For various reasons, closing participants want to meet these particular requirements so that their loans are marketable on the secondary market.
Electronic documents are being introduced for mortgage transactions. Use of these documents can be beneficial to participants in such markets because they can reduce the amount of physical error checking that is often required for paper documents, as well as the number of opportunities for creating discrepancies and errors among and between the various forms used by different participants. However, even where a lender uses electronic documents, a typical closing will still often implement traditional paper based practices, wherein borrowers sign standard paper forms using pen and ink (also referred to as “wet” signing in the industry). Furthermore, there is a disincentive to using electronic documents where other parties in the closing transaction will not be relying upon the electronic document (e.g. closing agent, borrower).
Still another problem with electronic documents is that there are various different systems to which a document will need to integrate. Even where all of the parties to a transaction, and parties to related transactions use the same electronic document format, there are still often discrepancies among and between the variously defined documents.
What is needed is a system for accommodating closing transactions that allows participants to avoid the above described problems and encourages and accommodates the sharing of data, and ensures the accuracy of data used for the closing.